CONSTRUCTION OF SOCIAL ACCOUNTING MATRIX FOR KENYA 2009

Transcription

1 CONSTRUCTION OF SOCIAL ACCOUNTING MATRIX FOR KENYA 2009 By Miriam W. O. Omolo, Ph.D Programmes Coordinator Institute of Economic Affairs Nairobi, Kenya TABLE OF CONTENTS September BACKGROUND The Problem Objectives of the Study Significance of the Study METHODOLOGY AND DATA Methodology Data Sources RESULTS AND DISCUSSION The Kenyan Economy Total Value Added Intermediate Demand and Transaction Costs Factor Income Distribution Consumption and Savings Government and Investment Foreign Trade CONCLUDING REMARKS... 7 REFERENCES... 7 ANNEX... 9 Micro SAM Kenya 2009 (Kshs. Million)... 9 SUPPLY TABLE USE TABLE... 19

2 Abstract This paper sought to construct a social accounting matrix for Kenya 2009 given that the most recent SAM dates back to The objective of this exercise was to construct a micro SAM incorporating accounts of individual activities, primary factors, and economic institutions and to balance the SAM using cross entropy method. The SAM 2009 provides a new opportunity for modelers to use most recent Kenyan SAM to undertake economy wide analysis. 1 BACKGROUND A Social Accounting Matrix (SAM) is a matrix representation of transactions in a socioeconomic system. It is generally a comprehensive and disaggregated framework that shows the generation of incomes by activities of production. It provides information on the income generation process of a country, generating details on the sources and destinations of transactions by economic institutions. Within the SAM framework, one is able to establish the income and revenue links between agents and institutions at an empirical level. Able to generate information on interdependencies in the socio-economic systems and the interaction between various agents within the socio-economic system, a SAM is therefore an important tool for economic analysis. Pioneer work on social accounting techniques were undertaken by Stone (1978) and Pyatt and Round (1979, 1985). A SAM can be used to undertake several analytical questions, such as economic drivers of growth, the impact of public policies on millennium development goals, food security, and poverty reduction. However, such questions can only be answered depending on the level of disaggregation of a SAM and its availability. In Kenya, for example, the country has set out its development goals and strategies in the economic blue print Kenya Vision 2030: A Globally Competitive and Prosperous Kenya, but the most recent SAM that can be used to undertake economy-wide analysis for Kenya dates back to Moreover, the level of disaggregation of the 2003 SAM does not allow for undertaking in-depth development analysis. 1.1 The Problem Kenya Vision 2030 has been put in place as the vehicle that will accelerate the transformation of the country into a rapidly industrialized middle-income nation by The main anchors of this vision are macroeconomic stability, continuity in government reforms, enhanced equity and wealth creation opportunities for the poor, and development in infrastructure, energy science, and technology, among others. Under the economic pillar, six sectors are projected to experience a 10 percent growth rate per annum: tourism, agriculture, manufacturing, wholesale and retail trade, business process outsourcing, and financial services. While these are important sectors for the economy, there is no evidence on how the choice of these sectors as the main drivers of growth was reached. An analysis of the forward and 1 Page

3 backward linkages within the economy would greatly advise policy makers of the main sectors to focus on. This kind of information can be obtained from a detailed SAM. Secondly, under the social pillar, education and health have been identified as factors that would ensure equitable social development in a just and cohesive society. Within the social sector, the government is expected to increase quality and access to social services through increased funding. It would be important to differentiate private and government production in a SAM in order to establish the economy-wide effects of government social policies. Such an analysis is important in monitoring and evaluation of the medium term implementation framework of the Vision The Kenya SAM 2003 is too dated and lacks disaggregation needed to effectively analyse the economy-wide effects of the government s social policies and the millennium development goals, which form an important part of social policies. Lastly, there are new issues arising in the global arena such as climate change, energy use, and environmental conservation. Such issues should also be incorporated appropriately in an integrated data framework so that economy wide effects can be established. This is possible through examination within a SAM framework. 1.2 Objectives of the Study The main objectives of this study are as follows: 1) To construct a micro SAM incorporating accounts of individual activities, primary factors, and economic institutions. 2) To balance the SAM using cross entropy procedure in GAMs (General Algebraic Modeling System). 3) To construct a macro SAM that consistently captures and represents the macroeconomic framework for the Kenyan economy in Significance of the Study As previously mentioned, there are new issues arising in the global development arena-- climate change, clean energy development, and environmental conservation, for example-- and these issues are cross cutting and tend to affect different sectors of the economy. It is important to update the SAM so it can facilitate such analysis within a general equilibrium framework to determine the economy-wide impact of these developments. This study intends to construct a 2009 SAM that can be used to analyse the 21 st century s emerging issues. An additional significance of this study will be its contribution to currently ongoing research. For example, the Institute of Economic Affairs, a public policy think-tank, is involved in examining the impact of the Doha negotiations on poverty in Kenya within its trade programme. Initial impacts of the Doha on poverty have been undertaken under the project using the SAM for Kenya for 2003, which is quite dated. A more updated SAM will be appropriate in undertaking analysis of the impact of the on-going Doha negotiations. The same goes for analysis of Kenya under the FAO Policy Support Programme multi-country project Impact assessment of development paradigms and related policies. This project is aimed at providing conceptual insights on the impact of selected development paradigms and policy 2 P age

4 assistance to address specific long term sustainable development issues relevant to poverty and food security by means of strategies and policies. The methodology adopted is CGE analysis using country specific social accounting matrices; but again it would be beneficial to undertake the analysis using a more recent SAM since the only available SAM is for Looking to the future, the updated SAM will contribute significantly to answering the 21 st century challenges related to millennium development goals, trade liberalization impacts, climate change and environmental impacts. The SAM is intended to include components that would facilitate such analysis. 2 METHODOLOGY AND DATA 2.1 Methodology 1) Construct a micro SAM incorporating accounts of individual activities, primary factors, and economic institutions. The 2009 micro SAM was derived from the Kenya 2009 supply and use table (SUT). The SUT is a main table in the system of national accounts. It can be used for both analytical and statistical purposes. The SUT s supply table shows the value of all commodities produced in the economy at basic and at purchaser s prices. The use table shows the value of production of each commodity and its use in the economy. In order to derive the SAM from the Kenya SUT 2009, the following issues were considered: 1. Seventeen activity-commodity mappings using the broad economic category (BEC) classification were used based on the official data availed to the public. 2. Institutions were disaggregated as follows: a. 20 households from both rural and urban areas were included, disaggregated by deciles. b. While the original intention was to disaggregate ROW to East Africa Community, European Union, United States, China and the Rest of the World, disaggregated services data was not available even though goods data was available. Consequently, the ROW was not disaggregated. c. Taxes were disaggregated to income taxes, value added tax, import duty, and other taxes. d. Margins were not disaggregated to domestic, import, and export costs due to data unavailability. 3. Factors were aggregated as capital and labour (skilled, unskilled and semi-skilled). The SUT (Table 2.1) was converted to a SAM (Table 2.2) reflecting relationship between the SUT and the SAM. For example, intermediate consumption (U1) in the SUT became the input-output matrix in the SAM (2,1) because intermediate consumption shows the commodities each activity uses to produce output. Compensation of employees (U8), which is a component of gross value added in the SUT, became factors (3,1) in the SAM, which is the value factor of production that activities use to produce output. Taxes, which constitute value added (U8) in the SUT, became taxes paid by activities to institutions (4,1) in the SAM. The 3 P age

5 total for Column 1 in the SAM is the total cost of production, which equals total from for row 1, Gross output. Household and government consumption (U3 and U4 respectively) makes up final consumption in the SAM (2,4); this is the amount of commodities demanded by institutions. Gross fixed capital formation (U5) and changes in inventory (U6) form investment demand for commodities in the SAM (2,5). Exports (U2) in the SUT is the amount of commodities demanded by the rest of the world in the SAM (2,6). The row total for the second row in the SAM is the final demand for composite commodities, while the corresponding column total supply of the composite commodity. The composite nature of the commodity is from the imports (S3) in the SUT SAM (11,2) that have been used to produce the commodities. Kerwat et al. (2009) also used this methodology for deriving the SAM for Libya. Factor revenues and domestic and international institutional transfers and savings are derived from the integrated economic accounts. However, as most developing countries rarely produce the integrated economic accounts and the supply and use table in tandem, alternative data sources such as economic surveys (in the case of Kenya) and the central bank reports were used to derive this data. 2) Balance the SAM using cross entropy procedure in GAMs (General Algebraic Modeling). Given that different data sources were used in deriving the 2009 SAM for Kenya, the SAM derived was initially unbalanced (i.e. rows were not equal to columns). The cross entropy method by Robinson and El- Said (2000) was then used to balance the SAM. Kerwat et al. (2009) explain that this approach attempts to find a new SAM which is consistent with the original matrix but whose corresponding rows and columns have the same totals. This balancing method minimizes the entropy distance of the new SAM from the initial SAM subject to the constraint that row and column totals are equal and will penalize larger deviations between two corresponding cells more heavily than smaller deviations. Each cell in a matrix represents a payment from a column j to a row i represented by t i, j. The row totals must equal the column total so that t t (1) y i = i, j = y i j, i j j represents the total receipts and expenditures of account i. A SAM coefficient matrix a is constructed from a matrix T by dividing cells of each column by the column total so as to obtain: ti, j a (2) i, j = y j The cross entropy method by Robinson and El Said (2000) for updating or balancing a SAM explains the estimation of coefficients of the input-output table. The objective is to find a new set of a ij coefficient that minimizes the distance between the prior a ij and the new estimated coefficient matrix. 4 P age

6 ai, j min ai, j ln i j ai, j (3) Subject to * * a i, j y j = yi (4) j j a j, i = 1 and 0 a j, i 1 (5) Forming the langrangian r and solving the equation (3)-(5) provides the solution (6). langrage multipliers associated with the information from the data and the prior. are the (6) 5 P age

7 Table 2-1: Model Supply and Use Table Category of goods & services Output at basic prices (S7) Taxes and subsidies (S6) Margins (S5) SUPPLY TABLE Supply at ACTIVITIES purchasers Domestic supply at domestic price (S1) prices (S4) Total Supply at purchasers price (S8) Total supply at purchasers price (S2) Imports (S3) Category of goods & services Output at basic prices (U7) ACTIVITIES Intermediate consumption (input-output table) (U1) Value added (U8): compensation of employees, taxes and subsidies, mixed incomes Output at purchasers price (U9) USE TABLE Exports (U2) Household consumption (U3) Gov. consumption (U4) GFCF (U5) Changes in inventory (U6) Table 2-2: Model Social Accounting Matrix ACT COMM MARGINS FACTORS INST SAV/INV ROW (1) (2) (2 ) (3) (4) (5) (6) ACT (1) Domestic Purchase SUT (S1) COMM (2) Intermediate Consumption SUT (U1) MARGINS (2 ) Transport and Trade margins SUT (S5) FACTORS (3) Gross Value Added SUT (U8) INST (4) Act. Taxes and Com. Taxes and Subsidies SUT (U8) Subsidies SUT (S6) Final Consumption SUT (U3&U4) Investment Consumption SUT (U5&U6) Exports SUT (U2) Factor Revenues Transfers Transfers SAV/INV (5) Domestic Savings Foreign Savings ROW (6) Imports SUT (S3) 1 P age

8 Table 2-3: Unbalanced Macro SAM Kenya 2009 Activities (C1) Commodities (C2) Capital (C3) Labour (C4) Households (C5) Government (C6) Enterprises (C7) Taxes (C8) Investment (C9) TOTAL Activities (R1) 4,383, ,629 4,728,134 Commodities (R2) 2,154,263 1,958, , ,072-1, ,886 5,529,827 Capital (R3) 1,716,687 1,716,687 Labour (R4) 892, ,809 Households (R5) 892, , ,013 2,164,360 Government (R6) 378,898 24, ,051 Enterprises (R7) 1,716, ,313 1,870,000 Taxes (R8) (496) 298, ,098 41, ,511 Savings (R9) (376,367) (542,756) 1,828,792 (369,760) 539,909 Stock (R10) (1,932 (1,932) ROW (R11) 882, ,135 TOTAL 4,728,134 5,529,827 1,716, ,809 2,164, ,051 1,870, , ,140 (1,932) 882,135 Stock (C10) ROW (C11) 2 P age

9 3) Construct macro SAM that consistently captures and represents the macroeconomic framework for the Kenyan economy in The Macro SAM was derived by aggregating the micro SAM so that it consistently captured the macroeconomic framework of the economy is Data Sources The sources of the data and the year are shown on the table below: Data Source Year Supply and Use Table 2009 Kenya National Bureau of Statistics 2009 Household Income Kenya Integrated Household Budget Survey 2005/2006 Labour Data Kenya Integrated Household Budget Survey 2005/2006 Remittance Data Central Bank of Kenya 2009 Tax Data Economic Survey (Kenya) 2009 Statistical Abstract (Kenya) 2009 The supply table shows the total supply of goods and services supplied in the economy in The supply table has three sub-matrices: the production matrix, which shows all products produced in the economy; the import matrix, which shows the imports of goods and services in the economy; and the valuation matrix, which has trade and transport margins, taxes, subsidies. The valuation matrix is largely used for converting basic output prices to purchasers prices. The Use table shows the final use of goods and services in the economy. It provides the input structure of the economy. The two tables when combined produce a supply and use table (SUT), which can be used to obtain the following sub accounts for the social accounting matrix: input-output table, value added sub matrix, exports and imports and consumption data. The Kenya Integrated Household Budget Survey (KIHBS) 2005/2006 data was collected with the main objective of obtaining a wide spectrum of socio-economic indicators required to measure monitor and analyse the progress in improving living standards in a single integrated household survey. This data contains information on demographics, housing, education, health, agriculture and livestock, enterprises, expenditure and consumption, household social amenities and community perspectives. From the KIBHS data, one is able to use the data on consumption, labour, and transfers to disaggregate the SAM accounts to a required level of aggregation for household domestic consumption, institutional transfers, and taxation. Tax levied on institutions was obtained from the Kenya Economic Surveys, while savings were taken as residuals. 3 RESULTS AND DISCUSSION A social accounting matrix for Kenya (2009) was constructed from various data sources as explained in section 2.2. The summarised Kenya SAM (2009) is provided in table 3.1, while table 3.2 gives the disaggregation to 17 commodities. 1 P age

10 3.1 The Kenyan Economy The gross domestic product 1 (GDP) at market price is approximately KES 1.7 trillion; this comes from 81 activities within the economy derived from the SUT. These activities have been categorized to 17 sectors by broad economic categories as shown on Table 3.3. The service sector is the largest contributor to GDP (around 50 percent). The manufacturing sector contributes 21 percent to GDP, while food manufacture constitutes 44 percent of manufacturing in general. Mining and quarrying seems to be a less developed sector, as it reduces GDP by 2.2 percent. 3.2 Total Value Added Total value added, i.e. earnings received from the factors of production (capital in the form of profits paid to capital and labour in the form wages) is also known as GDP at factor cost. GDP at factor cost is KES 1.8 trillion. Production in Kenya is capital intensive, given that it constitutes around 65 percent, while labour (in the form of wages) takes the remaining 35 percent of the value added (see table 3.3). Agriculture, forestry and fishing, and real estate are the most capital-intensive economic sectors (35.3 and 14.3 percent, respectively). Disaggregated to skilled, unskilled and semi-skilled labour, more skilled labour is found in the social sectors of education and health. The public sector has unskilled and semi-skilled labour. 3.3 Intermediate Demand and Transaction Costs Intermediate demand shows the demand for commodities and services used in the production process. This is shown in the SAM (Table 3.1) by cell (R2, C1), which amounts to KES trillion. Intermediate consumption constitutes 39 percent of the total demand. The disaggregated SAM (Table 3.4) provides information on production technologies, i.e. how much input is used per unit of output. Manufactured foods, for example, use approximately 49 percent of inputs from agricultural sector. The transport margins as shown on Table 3.1 sum up to zero; however, when disaggregated in Table 3.2, manufactured goods and transport and storage spend approximately KES 249 billion on margins. The row/column total for margins equal zero because the same margins are included in the wholesale and retail sector. 3.4 Factor Income Distribution Households receive their incomes from labour and transfers from government, enterprises, and ROW (Table 3.1). Income from labour forms the highest proportion of household income source (41 percent), followed by transfers from government (30 percent), and remittances from abroad (28 percent). With the disaggregated SAM (Table 3.4), one can establish the sectors from which poor households obtain most of their income, with rural households obtaining most of their incomes from the agricultural sector while the rich urban households derive their incomes from manufacturing and services. 1 This is given by the identity GDP= C+G+I+X-M i.e. GDP= private consumption +government consumption + investment + exports - imports. 2 Page

11 3.5 Consumption and Savings Around 87 percent of household income is spent on commodities; the rest of the income is shared between tax and savings. Households have two sources of consumption: own production (KES 345 billion) and marketed production (KES 1.3 trillion). Overall households have negative savings (table 3.1), however, the disaggregated SAM, table 3.4 shows rural and urban households in the fourth decile having positive savings. The government is a major consumer of services such as public administration, education and health; and, like households, the government dis-saves, meaning that the government has a budget deficit. The private sector (enterprises) is the main saver in the economy. 3.6 Government and Investment The government receives KES 379 billion in income from taxes: value added tax (VAT), income tax, import duties, other taxes, and transfers from the rest of the world. Income tax and value added tax constitutes approximately 63 percent of government income. Income receipt from the ROW is largely in the form of budgetary or development support. Investment demand (C9) is largely made up of mining and quarrying, non-food manufactures and construction. Savings from the enterprises largely finances this investment demand. 3.7 Foreign Trade Exports (R2, C11) constitute almost 10 percent of domestic production, which amounts to KES 322 billion. Clearly the structure of exports has been changing in Kenya: while previously the main exports came from agriculture, currently 60 percent of the exports are from manufacturing and agricultural exports constitute 17 percent of the total exports. Manufacturing, which includes both food and other manufactured goods, has an export intensity (EI 2 ) of 49.8 percent. Mining, on the other hand, has an EI of 19 percent. Imports (R11, C2- table 3.1) constitute 35 percent of GDP, KES 601 billion. Non-food manufactured goods constitute 69 percent of imports. The top two import non-food manufactured products for Kenya are petroleum products and transport equipment. Total imports almost double exports, implying a huge negative trade balance. It is possible to establish the import penetration ratio from the disaggregated SAM, where mining and quarrying has a high import penetration ratio of 65 percent followed by other manufactured goods at 37 percent. Other manufactured goods consist of metallic and chemical products. 2 Export Intensity = Exports/Gross output 3 P age

12 Table 3-1: Balanced Macro SAM Kenya 2009 (KES Million) Activities (C1) Commodities (C2) Capital (C3) Labour (C4) Households (C5) Government (C6) Enterprises (C7) Taxes (C8) Investment (C9) TOTAL Activities (R1) 2,977, ,629 3,322,551 Commodities (R2) 1,486,889 1,323, , ,430-1, ,432 3,787,256 Capital (R3) 1,208,877 1,208,877 Labour (R4) 627, ,137 Households (R5) 627, , ,013 1,528,197 Government (R6) 378,898 17, ,464 Enterprises (R7) 1,208, ,405 1,314,282 Taxes (R8) , ,294 29, ,898 Savings (R9) -281, ,111 1,285, , ,068 Stock (R10) -1,362-1,362 ROW (R11) 601, ,415 TOTAL 3,322,551 3,787,256 1,208, ,137 1,528, ,464 1,314, , ,068-1, ,415 Stock (C10) ROW (C11) 4 P age

13 Table 3-2: GDP shares by Broad Economic Categories Activities by Broad Economic Number of SAM GDP % Share of GDP Category (BEC) activities Agriculture, forestry and fishing 5 273, Mining and quarrying 1 4,196 (2.2) Manufactured food , Other manufactured , Electricity and water 3 23, Construction 1 177, Wholesale and retail trade; repairs 2 4, Transport and storage , Accommodation and catering services 1 61, Information and communication 3 86, Financial and insurance services 5 63, Real estate services 1 65, Professional and support services 4 18, Public administration 1 169, Education 3 174, Health and social work 2 64, Other services 4 19, Table 3-3: Distribution of Factors of Production Unskilled Semi-Skilled Skilled Capital Agriculture, forestry and fishing Mining and quarrying Manufactured food Other manufactured Electricity and water Construction Wholesale and retail trade; repairs Transport and storage Accommodation and catering services Information and communication Financial and insurance services P age

14 Real estate services Professional and support services Public administration Education Health and social work Other services P age

15 4 CONCLUDING REMARKS The 2009 SAM has captured the key characteristics of the Kenyan economy. Services have been found to contribute 50 percent of gross domestic product (GDP), followed by manufacturing sector, which contributes 21 percent. The agricultural sector contributes the rest and is considered a key sector in the economy because it contributes an average of 30 percent to rural household incomes. Agricultural production has also been found to be capital intensive, constituting about 65 percent of value added in the agricultural sector. This sector also forms a major intermediate input (over 40 percent). Private sector savings finances investment demand in the economy. With a huge trade balance, it follows that there is a huge balance of payment deficit. This SAM for Kenya 2009 has been built using the most recent and available data, namely the supply and use table (SUT) 2009 and KIBHS data set 2005/2006. Normally, an Integrated Economic Account (IEA) is required to produce the institutional transfers used in the SAM. Given that the Kenyan government does not produce this data set, several data sources were used. It is hoped that revised editions of this paper can be produced in the future with the availability of more recent household survey data. Additionally, the use of different data sources and the consequent SAM balancing tends to alter the final value of GDP even though the structure of the economy remains the same as the original SAM. One major way to solve this challenge is the use of consistent data sources from SUT and the IEA in SAM construction. REFERENCES Basanta K. Pradhan, M. R. Saluja, Shalabh K. Singh. (2006). Social accounting matrix for India: concepts, construction and applications. Sage Publishers, India. Government of Kenya. (2007). Kenya Vision 2030 for a Competitive and Prosperous Kenya. Ministry of Planning and National Development. Kerwat J., Dewhurst J., and Molana H. (2009) Constructing a Social Accounting Matrix for Libya. University of Dundee. Löfgren, H., Harris, B., and Robinson, S. (2002). A Standard CGE Model in GAMS. Microcomputers in Policy Research 5, International Food Policy Research Institute. Robinson, S. and El-Said, M. (2000). GAMS code for estimating a social accounting matrix (SAM) using cross entropy (CE) methods. TMD Discussion Paper No. 64, Trade and Macroeconomics Division, International food Policy Research Institute, Washington. Pyatt, G. and Round, J. I. (1979). Accounting and Fixed Price Multipliers in a Social Accounting Matrix Framework. The Economic Journal, Vol. 89, No pp P age

16 Pyatt, G. and Round, J. I Social Accounting Matrices: A Basis for Planning. The World Bank Symposium, World Bank, Washington DC, US 8 P age

17 ANNEX Micro SAM Kenya 2009 (Kshs. Million) Annex Table 1: Kenya Micro-SAM 2009 ACTIVITIES COMMODITIES ACTIVITIES Agriculture, forestry and fishing 2 Mining and quarrying 3 Manufactured food 4 Other manufactured 5 Electricity and water 6 Construction 7 Wholesale and retail trade; repairs 8 Transport and storage 9 Accommodation and catering serv. 10 Information and communication 11 Financial and insurance services 12 Real estate services 13 Professional and support services 14 Public administration 15 Education 16 Health and social work 17 Other services 1 Agriculture, forestry and fishing 35, ,221 4, , Mining and quarrying 1, , ,206 3 Manufactured food 9, ,865 5,161 22, ,741 4 Other manufactured 51,570 3,642 29, ,799 24,091 96,482 27,481 82,828 2,953 13,879 7,382 2,752 2,484 21,187 5 Electricity and water 3, ,589 4,838 1, ,337 1,917 1, ,004 3, ,170 6 Construction ,074 4,113 3, ,728 1,224 9, ,033 7 Wholesale and retail trade; repairs ,570 13, , ,148 8 Transport and storage 3, ,268 12,600 1,711 8,383 21,505 59,063 1,265 4,744 3, ,237 4,030 9 Accommodation and catering serv ,663 4, ,470 1, ,036 4, Information and communication 2, ,426 3, ,583 11,971 3,564 1,344 21,706 5,968 1,528 1,095 4, Financial and insurance services ,557 5, ,913 13,856 8, ,788 9,979 2,354 1,114 16, Real estate services , ,676 21,184 2,823 1,952 4,953 6,802 1, , Professional and support services 1, ,160 6, ,831 9,888 7, ,234 2,627 1, , Public administration , Education 16 Health and social work 17 Other services ,271 1,226 1, , ,519 Margins 9 P age

18 FACTORS INSTITUTIONS Unskilled 28,222 2,505 12,748 13,486 4,553 9,036 35,185 15,519 8,390 3, ,493 13,816 37,183 Semi-Skilled 22, ,908 22,856 7,387 17,610 29,371 23,209 7,223 17,143 38,264 10,027 7,786 50,775 Skilled 1, ,026 1,372 2, ,371 2,856 1,192 Capital 426,405 7,284 49, ,679 25,688 45,143 70,356 98,592 18,601 43,013 56, ,485 25,097 12,310 hrur0 hrur1 hrur2 hrur3 hrur4 hrur5 hrur6 hrur7 hrur8 hrur9 hurb0 hurb1 hurb2 hurb3 hurb4 hurb5 hurb6 hurb7 hurb8 hurb9 Government Enterprises Income Tax VAT Import duty Other taxes 204 Savings-Investment Stock ROW TOTAL 588,582 18, , ,414 67, , , ,650 73, , , ,697 58, ,870 ACTIVIT IES COMMODITIES Agriculture, forestry and fishing 374,297 13,928 2 Mining and quarrying 17,195 1,140 3 Manufactured food 302,699 6, P age

19 COMMODITIES FACTORS INSTITUTIONS 4 Other manufactured 5, ,056 5 Electricity and water 57,119 6 Construction 209,128 7 Wholesale and retail trade; repairs 1, , ,277 8 Transport and storage 327,597 9 Accommodation and catering serv. 71, Information and communication 123, Financial and insurance services 137, Real estate services 13 Professional and support services 14 Public administration 15 Education 6, Health and social work 17 Other services 1 Agriculture, forestry and fishing 1, Mining and quarrying 3 Manufactured food 3, Other manufactured 25,188 15,142 5,286 5 Electricity and water 4, ,024 6 Construction 1, Wholesale and retail trade; repairs 1, Transport and storage 4,529 1,580 1,520 9 Accommodation and catering serv. 5, Information and communication 3,393 1, Financial and insurance services 4,214 1,027 2, Real estate services 1,808 1,315 1, Professional and support services 3, Public administration Education 16 Health and social work 17 Other services 1, Margins 38,396 4,609 65, ,832 (228,685) (20,582) 2,724 Unskilled 43,468 5,215 1,675 Semi-Skilled 50,361 26,697 2,340 Skilled 15,490 6,006 3,774 Capital 9,624 1,075 24,517 hrur0 hrur1 hrur2 hrur3 hrur4 hrur5 11 P age

20 hrur6 hrur7 hrur8 hrur9 hurb0 hurb1 hurb2 hurb3 hurb4 hurb5 hurb6 hurb7 hurb8 hurb9 Government Enterprises Income Tax VAT 4,296 39,891 38,540 1, ,872 11, Import duty 1, ,333 18, Other taxes (556) 54 11,392 61,878 2, Savings-Investment Stock ROW 52,696 40,937 43, , ,434 9,722 1,429 14,507 4,797 TOTAL 181,571 64,092 46, ,291 62, ,027 1,126,616 61, ,128 32, ,630 87, , ,656 ACTIVITIES Margins Unskilled FACTORS Semi- Skilled Skilled Capital hrur0 hrur1 hrur2 1 Agriculture, forestry and fishing 11,749 17,050 24,610 2 Mining and quarrying 3 Manufactured food Other manufactured 5 Electricity and water Construction 7 Wholesale and retail trade; repairs Transport and storage 1,053 9 Accommodation and catering serv , Information and communication 11 Financial and insurance services 1, Real estate services 110,900 1,663 2,291 2, Professional and support services 58, Page

21 COMMODITIES FACTORS INSTITUTIONS 14 Public administration 171, Education , Health and social work , Other services 29, Agriculture, forestry and fishing 5,920 9,491 9,084 2 Mining and quarrying 3 Manufactured food 6,325 9,963 11,852 4 Other manufactured 2,168 4,130 5,008 5 Electricity and water Construction 7 Wholesale and retail trade; repairs Transport and storage 678 1,767 2,280 9 Accommodation and catering serv ,006 1, Information and communication Financial and insurance services Real estate services Professional and support services Public administration Education , Health and social work 469 1, Other services Margins Unskilled Semi-Skilled Skilled Capital hrur0 7,467 2,021 7 hrur1 12,343 5,856 8 hrur2 15,006 8, hrur3 16,796 11, hrur4 19,162 15, hrur5 22,310 18, hrur6 22,420 24, hrur7 24,669 33,375 1,025 hrur8 22,926 39,477 1,721 hrur9 21,099 39,229 2,444 hurb hurb hurb hurb hurb4 1,380 1, hurb5 1,457 2, P age

22 hurb6 3,565 4, hurb7 4,502 8, hurb8 10,857 23, hurb9 33, ,683 34,318 Government Enterprises 1,208,877 Income Tax 9,793 10,896 10,811 VAT 2, Import duty Other taxes Savings-Investment (15,116) (28,973) (23,170) Stock ROW ,917 1, TOTAL 115,463 75, , ,748 64,375 30, , ,234 41,629 1,208,877 26,977 33,062 51,186 ACTIVITIES COMMODITIE S INSTITUTIONS hrur3 hrur4 hrur5 hrur6 hrur7 hrur8 hrur9 hurb0 hurb1 hurb2 hurb3 hurb4 hurb5 hurb6 1 Agriculture, forestry and fishing 16,829 18,577 19,535 17,916 18,826 15,405 9, , ,232 1,354 1,928 2 Mining and quarrying 3 Manufactured food 901 1,484 1,491 1,435 2,032 1, Other manufactured 5 Electricity and water 604 1,133 1, ,466 1, Construction 7 Wholesale and retail trade; repairs 8 Transport and storage 9 Accommodation and catering serv. 10 Information and communication 11 Financial and insurance services 12 Real estate services 2,542 3,649 3,872 3,830 4,925 4,449 4, Professional and support services 14 Public administration 15 Education 16 Health and social work 17 Other services 9, ,564 1 Agriculture, forestry and fishing 13,521 19,331 21,914 24,050 29,811 20,897 25, ,709 2 Mining and quarrying 3 Manufactured food 13,787 14,611 16,833 19,044 21,737 20,116 19, ,005 1,635 2,027 4,257 5,978 10,426 4 Other manufactured 6,439 7,134 8,426 11,039 13,341 14,434 22, ,285 2,215 4,146 5 Electricity and water , P age

23 FACTORS INSTITUTIONS 6 Construction 7 Wholesale and retail trade; repairs Transport and storage 3,392 3,610 4,750 6,357 7,199 8,143 10, ,164 2,858 9 Accommodation and catering serv. 1,541 1,817 2,267 2,650 3,177 3,453 4, , Information and communication ,041 1,972 2,283 3,561 5, , Financial and insurance services 878 1,188 1,098 1,694 2,650 4,227 4, , Real estate services 1,135 1,363 1,632 2,172 2,179 2,831 3, Professional and support services Public administration Education 2,201 2,262 3,164 4,300 5,152 4,877 6, , Health and social work 1, ,417 1,710 1,870 1,902 2, Other services Margins Unskilled Semi-Skilled Skilled Capital hrur0 hrur1 hrur2 hrur3 hrur4 hrur5 hrur6 hrur7 hrur8 hrur9 hurb0 hurb1 hurb2 hurb3 hurb4 hurb5 hurb6 hurb7 hurb8 hurb9 Government Enterprises Income Tax 12,488 12,213 12,820 10,567 12,541 10,973 6, ,722 1,548 1,205 1,810 VAT Import duty 15 Page

24 Other taxes Savings-Investment 134,038 (40,803) (5,974) (53,842) (16,586) (31,180) (34,534) (1,257) (2,282) (13,840) (4,517) 4,366 (11,868) (17,046) Stock ROW TOTAL 212,816 60,178 96,668 57, ,653 88,887 96, ,463 2,622 17,277 4,981 15,885 ACTIVITIES COMMODITIES INSTITUTIONS hurb7 hurb8 hurb9 Govern ment Enterprise s Income Tax VAT Import duty Other taxes s-i Stock ROW TOTAL 1 Agriculture, forestry and fishing 2,766 4,653 6, ,582 2 Mining and quarrying 18,335 3 Manufactured food ,675 4 Other manufactured 451,414 5 Electricity and water ,950 6 Construction 209,128 7 Wholesale and retail trade; repairs 263,907 8 Transport and storage 328,650 9 Accommodation and catering serv. 73, Information and communication 123, Financial and insurance services 138, Real estate services 1,187 2,619 62, , Professional and support services 58, Public administration 171, Education 181, Health and social work 64, Other services 5,066 46,721 1 Agriculture, forestry and fishing 2,972 5,705 23,232 10,635 (3,824) (6,243) 56, ,291 2 Mining and quarrying ,564 62,935 3 Manufactured food 15,840 33,248 90,679 (2,090) 84, ,027 4 Other manufactured 7,184 15,937 99, ,201 6, ,618 1,126,616 5 Electricity and water ,846 2, ,456 6 Construction 16, , ,128 7 Wholesale and retail trade; repairs ,868 32,309 8 Transport and storage 4,911 11,691 53,108 55, ,630 9 Accommodation and catering serv. 2,234 5,176 27,842 1,113 87, Information and communication 1,840 6,243 46, , , Financial and insurance services 1,786 4,783 34,468 2, , Real estate services 947 2,383 43, , Professional and support services ,340 1,044 12,155 1,052 75, Public administration , , , P age

25 FACTORS INSTITUTIONS 15 Education 2,187 5,545 42,513 90, , Health and social work 1,022 2,358 22,470 22,257 64, Other services 680 1,619 10,432 1,617 30,596 Margins (0) Unskilled 241,274 Semi-Skilled 344,234 Skilled 41,629 Capital 1,208,877 hrur0 17, ,977 hrur1 14, ,062 hrur2 27, ,186 hrur3 184, ,816 hrur4 25, ,178 hrur5 54, ,668 hrur6 9, ,380 hrur7 55, ,653 hrur8 15, ,847 88,887 hrur9 22, ,967 96,037 hurb0 202 hurb hurb2 38 1,463 hurb3 1, ,622 hurb4 12,453 2,189 17,277 hurb5 73 1,356 4,981 hurb6 7,335 15,885 hurb7 4, ,668 23,951 hurb8 7 66, ,646 hurb9 12, , ,367 Government 142, ,028 23, ,849 17, ,464 Enterprises 105,405 1,314,282 Income Tax 3,478 6,736 15, ,294 VAT 108,028 Import duty 23,726 Other taxes 29, ,849 Savings-Investment (26,561) (10,247) (82,530) (382,111) 1,285,103 (279,001) 342,068 Stock (1,362) (1,362) ROW 601,415 TOTAL 23, , , ,464 1,314, , ,028 23, , ,068 (1,362) 601, P age

26 SUPPLY TABLE Annex Table 2: Supply Table Kenya 2009 Products Agriculture, forestry and fishing products Mining and quarrying products Agricult ure, forestry, fishing 763,575 Manufactured food products 19,620 Other manufactured products Electricity and water Construction Wholesale and retail trade; repairs - - Mining & quarryin g Manuf of food products Other manufac turing Supply of electricit y & water Construction Wholesale and retail Transpo rt and storage Hotels and restaura nt. Inform. & commun ication Finance and insuranc e Real estate , ,944 6,968 1,665 9, , , , ,423 Transport and storage ,834 Accommodation and catering services Information and communication Financial and insurance services Real estate services Professional and support services Public administration Education Health and social work , ,110 1, ,549-1, , , , , Other services Direct purchases abroad by residents Direct purchases in Kenya by nonresidents Total 783,195 17, , ,691 93, , , , , , , ,546 85,590 Prof. & support activities - 85, P age

27 Products Public admin, Education Health & social work Other service activities FISIM Total output at basic prices Imports Taxes on products Margins Total Supply at purchasers' prices USE TABLE Annex Table 3: Use Table Kenya 2009 Agriculture, forestry and fishing products Mining and quarrying products Agric, forestry, fishing Mining & quarrying Manufact.of food products Other manufacturing Supply of electricity & water Construction Agriculture, forestry and fishing products ,575 74,443 8,068 52, ,877 Mining and quarrying products ,038 59, ,472 79,476 Manufactured food products ,533 63,102 78,610 84, ,103 Other manufactured products , , , ,962 1,608,658 Electricity and water , , ,404 Construction , ,584 Wholesale and retail trade; repairs ,423 1, ,502 21,318 Transport and storage ,834 22,613 1,160-65, ,164 Accommodation and catering services - 4, ,894 1,905 8, ,651 Information and communication ,367 18,614 10,978 3, ,820 Financial and insurance services ,973 2,652 1, ,984 Real estate services , ,411 Professional and support services - 4, ,563 18, ,635 Public administration 262, , ,947 Education - 213, , ,094 Health and social work , , ,344 Other services ,026-59, , ,919 Direct purchases abroad by residents 0 22, ,603 Direct purchases in Kenya by nonresidents Total 262, ,794 99,639 59, ,605, , , ,767,991 Wholesale and retail Transport and storage Hotels and restaurant. Inform. & Communication Finance and insurance Real estate Prof. & support activities 31, ,982 6, , , , , P age

28 Agric, forestry, fishing Mining & quarrying Manufact.of food products Other manufacturing Supply of electricity & water Construction Wholesale and retail Transport and storage Hotels and restaurant. Inform. & Communication Finance and insurance Real estate Prof. & support activities Manufactured food products 11, ,108 5, , Other manufactured 41,225 2,909 50, ,775 34, ,279 23, ,514 6,201 52,748 6,199 4,465 2,569 products Electricity and water 2, ,482 7,168 1, ,077 3,237 2, , Construction 2, , ,827 3,987 4,555 1,553 1, , Wholesale and retail trade; ,254 10, , repairs Transport and storage 8, ,707 22,523 1,479 7,384 28,030 64,337 2,822 3,916 3,543 1,915 3,364 Accommodation and catering 1, ,512 8, ,400 1, ,759 services Information and communication 4,591 1,603 6,533 11, ,947 16,439 9,410 1,945 2,760 18,177 3,033 2,839 Financial and insurance ,695 6, ,888 11,608 11,182 1,131 1,719 14,200 3,880 1,655 services Real estate services , ,290 30,316 7,234 4,868 7,012 6,764 1,969 2,116 Professional and support services 1, ,026 4, ,586 17,632 18,022 2,045 9,454 2,500 2,885 1,507 Public administration , ,463 2, , Education Health and social work Other services ,678 1,036 1, , Direct purchases abroad by ,129 1, , ,050 residents Direct purchases in Kenya by nonresidents Total 105,931 7, , ,082 41, , , ,096 52,516 86,419 55,660 36,588 17,656 Value added, gross 677,265 10,582 96, ,610 51, , , ,126 51,038 95, , ,958 67, P age

29 Agric, forestry, fishing Mining & quarrying Manufact.of food products Other manufacturing Supply of electricity & water Construction Wholesale and retail Transport and storage Hotels and restaurant. Inform. & Communication Finance and insurance Real estate Prof. & support activities Compensation of employees 90,580 2,580 31,834 39,828 20,363 39,141 86,541 57,473 22,955 31,404 58,359 23,859 32,333 Other taxes on production Other subsidies on production Operating surplus / Mixed 586,685 8,002 64, ,782 31,558 68,264 81, ,652 28,083 64, , ,099 35,601 income Output 783,196 17, , ,691 93, , , , , , , ,546 85,590 Products Public admin, Education Health & social work Other service activities FISIM Total Intermediate Consumption Government consumption Private consumption Final use GFCF Changes in inventories Agriculture, forestry and ,802 13, ,986-5,906-8,706 88, ,877 fishing products Mining and quarrying , ,144 79,476 products Manufactured food products 2,005 1, , , , , ,103 Other manufactured 30,988 30,060 26,530 6, , , ,786 9, ,072 1,608,658 products Electricity and water 1,769 5, , ,949 4,207 42, ,830 98,404 Construction 4,699 1, ,328 18, , , ,584 Wholesale and retail trade; 1, , , ,660 21,318 repairs Transport and storage 7,532 5,862 1,516 3, , , , ,164 Accommodation and catering 7,396 7, , , , ,651 services Information and communication 15,936 8,648 3,430 1, , , , ,820 Exports Total Use 21 P age

30 Products Public admin, Education Health & social work Other service activities FISIM Total Intermediate Consumption Government consumption Private consumption Final use GFCF Changes in inventories Financial and insurance 18,047 3, ,885 56, ,161 3,668 63, , ,984 services Real estate services 2,340 3,414 1,320 2, , , , ,411 Professional and support services 5,131 2,650 1, ,021 1,422 6,644 16, , ,635 Public administration , ,811 2, ,947 Education ,601 90, ,094 Health and social work ,505 61, ,344 Other services 2,592 2, ,500 2,231 40, ,222 60,919 Direct purchases abroad by 2,687 1, , , ,603 residents Direct purchases in Kenya by nonresidents Exports Total Use Total 103,895 75,188 37,740 20,930 56,877 2,081, ,889 2,182, ,775-2, ,312 5,767,991 Value added, gross 159, ,607 61,899 38,096-56,877 2,524,077 Compensation of employees 131, ,994 55,855 28, ,783 Other taxes on production Other subsidies on production Operating surplus / Mixed 27,475 16,613 6,045 10,789-56,877 1,642,094 income Output 262, ,795 99,639 59, ,605, P age